US Mortgage Rates Rise Again... Loan Applications Hit Lowest in 28 Years

Mortgage rates in the United States have surged again, causing the number of borrowers applying for loans to buy homes to drop to the lowest level in 28 years.

On the 1st (local time), the U.S. Mortgage Bankers Association (MBA) announced that mortgage applications for home purchases decreased by 6% last week (February 18?24) compared to the previous week. This is the lowest level in 28 years. Compared to the same period last year, it plummeted by 44%.

[Image source=AP Yonhap News]

The sharp decline in mortgage applications is due to the surge in loan interest rates again. The average 30-year fixed mortgage rate, which had risen to the 7% range at the end of October last year, had been declining and dropped to 6.2% in January this year. However, in February alone, mortgage rates rose by more than 0.5 percentage points, causing applications to decrease for three consecutive weeks. Last week, the average 30-year fixed mortgage rate reached 6.71%, the highest since November last year.

Joel Kan, MBA Vice President, said, "Last week, the 30-year fixed mortgage rate recorded its highest level since November 2022, leading to a 6% decrease in loan applications," adding, "(Recent) inflation, employment, and economic indicators have signaled that inflation may not cool as quickly as expected, which continues to put upward pressure on interest rates."

Weekly refinance applications fell 6% from the previous week and 74% year-over-year. The share of refinance applications in total applications dropped to 31.8%. Vice President Kan stated, "Most homeowners are already locked into lower rates, so refinance applications were more than 70% lower than last year."